Frequently Asked Questions on Cyprus Companies - What is a Double Taxation Agreement and how does this affect a company?

A Double Taxation Agreement is an agreement between two nations whereby companies are not taxed twice for their income.  Such agreements are important particularly for natural or legal persons who are resident in one country and have income arising in another country.   Such natural or legal persons will not be taxed twice provided that those two countries have entered into a Double Taxation Agreement.  Cyprus has entered into a number of Double Taxation Agreements and more are currently being negotiated.  The advantages of these agreements are, as aforementioned, the avoidance of being taxed twice in two different countries and they also promote cross-border trade.  Such agreements do not encourage people to avoid paying tax since if people had to pay tax twice, most probably they would find ways in order to avoid paying tax in one of the counties and this could have criminal liability consequences.